Dussehra and financial freedom: Lessons from Ravana’s arrogance, greed and overconfidence

Ravan’s arrogance, overconfidence, greed, and misuse of resources ultimately led to his downfall.

In the epic tale of the Ramayana, Ravana is portrayed as a powerful king with vast resources, intelligence and knowledge. Yet his downfall was inevitable, primarily due to his arrogance, overconfidence and greed. As much as these traits contributed to his rise, they also ensured his destruction. Surprisingly, there are powerful financial lessons to be learnt from Ravana's story, particularly for those seeking financial freedom in today’s fast-paced world.

By drawing parallels between Ravana’s downfall and modern financial mistakes, we can learn how to avoid traps and build sustainable wealth.

Arrogance: The 'I know everything' syndrome

Ravana believed he had the power to control everything. Similarly, many investors today fall into the trap of thinking they know everything about the market.

A dangerous trait in personal finance is assuming that because you’ve had success in the past, the future will always align with your expectations. This mindset can lead to complacency, where investors neglect fundamental principles like risk management or asset diversification.

Take the example of the COVID-19 pandemic. At the time of the global market crash, when the market fell by 40 percent, most investors froze. Despite the clear opportunity to buy stocks at a significant discount, arrogance or fear paralysed many. The arrogant lot believed the market would continue falling or that they could perfectly time their entry. As a result, they missed the opportunity to create wealth during the market recovery.

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Overconfidence: Ignoring the warnings

Overconfidence is another flaw Ravana demonstrated when he ignored the advice of his allies and advisors.

Similarly, investors who are presumptuous often ignore signs of overvaluation in the market. They believe they can outsmart the market, leading them to hold on to investments even when prices reach unsustainable levels.

For example, in a bull market, many investors refuse to sell their assets, convinced that prices will continue rising indefinitely. But what they fail to understand is that markets move in cycles. Just as it’s important to buy during a downturn, it’s equally essential to sell during times of high valuations.

Investors who cling to their assets during times of market euphoria often end up losing significant value when the bubble bursts.

Greed: The trap of past performance

Ravana’s hunger for power blinded him to the consequences of his actions. In the same way, greed drives many investors to make irrational decisions, particularly when they chase past performance. Investing based on past returns is one of the most common but dangerous mistakes made by today’s investors. They look at the historical performance of mutual funds or stocks and assume that those returns will continue well into the future.

However, as the saying goes, “Past performance is no guarantee of future results.” Many investors learned this the hard way during the COVID-19 market crash. Those who relied on past returns missed the opportunity to invest when prices were low, opting instead for safer options or, worse, continuing to hold on to high-performing assets that soon lost their value.

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Resources: Are they working for you or against you?

Ravana had immense resources, but his misuse of them led to his downfall.

Many young professionals today find themselves in a similar trap with their financial resources. Instead of making their money work for them, they are locked into an EMI lifestyle. From home loans to car loans and personal credit, young professionals are burdened by debt, making it nearly impossible for them to invest meaningfully for the future.

Living pay cheque to pay cheque, with a significant portion going toward EMIs, reduces the ability to save and invest. Worse, it puts individuals at risk during economic downturns, job losses or recessions. Just as Ravana overextended his reach, many young professionals stretch their finances too thin, leaving them vulnerable to unexpected financial shocks.

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Financial freedom: Breaking the cycle

To achieve financial freedom, we must learn from Ravana’s mistakes.

Avoid the “I know everything” mindset

Acknowledge that the market is unpredictable. It’s essential to keep learning, adapting and seeking professional guidance from experienced financial experts who can guide you through market cycles instead of going in for a trial and error method of investing.

Recognise overvaluation

Don’t hold on to investments just because they’ve done well in the past. Be willing to sell when valuations are high and reallocate your portfolio to better opportunities.

Don’t chase past performance

Understand that what worked in the past may not work in the future. Focus on the fundamentals of the investment, not just its historical returns.

Escape the EMI trap

Make a conscious effort to reduce your debt burden. Instead of using credit to buy non-essential items, prioritise savings and investments that will help you grow wealth over time.

Invest during market falls

History has shown that market downturns are opportunities in disguise. Investors who have the courage to buy when others are fearful can benefit immensely when the market recovers.

Conclusion

Ravana’s story serves as a cautionary tale for all of us. His arrogance, overconfidence, greed and misuse of resources ultimately led to his downfall. In the same way, these traits can lead to financial ruin if left unchecked.

However, by recognising these pitfalls and taking proactive steps, we can achieve financial freedom and build a more secure financial future. The path to financial independence requires discipline, humility and a willingness to learn from both ancient wisdom and modern financial mistakes.

Let us strive to avoid the traps that snared Ravana and create lasting wealth for ourselves and future generations.

Disclaimer: The views and investment tips expressed by experts on Moneycontrol are their own and not those of the website or its management. Moneycontrol advises users to check with certified experts before taking any investment decisions.

The author is a personal financial mentor, boasting an impressive track record of over 25-plus years in the personal financial market.